WALLACE: We'll find out what President Obama thinks of the court's decision and how healthcare reform will work in the real world from White House chief of staff Jack Lew.

Then Republicans strike back, promising to wipe the law off the books. We will discuss the GOP plan for repeal and replace with the Senate's top Republican, Mitch McConnell.

Plus, ObamaCare and the 2012 election. We will ask our Sunday panel how the court's big ruling will play on the campaign trail, all right now on FOX News Sunday.

And hello again from FOX News in Washington. The Supreme Court issued its historic ruling in ObamaCare this week, but that didn't end the intense debate.

Joining us now from New York to discuss the ruling and how the law will be implemented is White House chief of staff, Jack Lew.

And Mr. Lew, become back to "Fox News Sunday."

JACK LEW, WHITE HOUSE CHIEF OF STAFF: Good to be with you, Chris. Good morning.

WALLACE: Now, that the court has upheld ObamaCare, does the president feel that the law is safe or does he believe that it must clear another hurdle in the November election to take full effect?

LEW: You know, Chris, one thing that is great about our system is when the Supreme Court rules, we have a final answer. The law is constitutional. It stands. We are going to proceed as we were proceeding to implement the law.

I think the thing that the American people want is for the divisive debate on health care to stop. We already see that with the implementation to date of the health bill that there are benefits that people are starting to see in their every day life. When their kids graduate from college and before they get a job, they still have health insurance.

People on Medicare, who fell into the doughnut hole and had $600 of bills to pay on prescription drugs, are covered. Families that have children with preexisting conditions don't have to worry about whether they will qualify or hit lifetime limits. I think that what we need to do is get on with the implementation now and that's what we intend to do.

WALLACE: Well, you say the debate should stop. You know it is not going to stop. Republicans, including Governor Romney, are talking about repeal and replace. Are you saying that's wrong?

LEW: Look, I think that anyone who wants to repeal is going to have to explain to the people that I just described why they are going to lose the benefits that they are already getting, why their kids are going to lose coverage on their health insurance, why the doughnut hole will come back.

And as far as the debate goes, I understand that there remains disagreement. The question is if you want certainty, if want to tell the business community and individuals that we are going forward, you can calm things down and say we are going to give it a chance.

We're going to implement it. That is what we do in this country, once we have a law pass the Congress, once we have the Supreme Court uphold it.

Now others might choose to have a debate. I actually think the American people want us to focus on the economy, on creating jobs on moving forward.

We send Congress plans which, if they were enacted, would have created a million more jobs for teachers, firemen, policemen; in home refinancing, in building our roads. It is time to move on to the agenda that the American people want us to be worrying about.

WALLACE: But, Mr. Lew, the fact is that a lot of Republicans believe and Governor Romney believes that having all of this regulation, having all of these taxes, having all of these mandates, in fact, is hurting jobs, that a lot of business men say, you know, I don't know if I can hire somebody because of the fact that it's going to cost me more money because of their health care.

LEW: Well, you know, if there is going to be a debate about taxes, we welcome that debate. Under this administration, we've cut taxes for middle class families by $3,600. In this very bill, this health care bill, it cuts taxes for are middle class families another $4,000.

The only thing in the bill that puts a burden on individuals to pay more is a penalty for those who can afford insurance and choose not to by it. And to be clear, that is 1 percent of the population. In Massachusetts, where this was tested in the plan that Governor Romney put in place, 1 percent of the population ended up paying the penalty.

The Congressional Budget Office looked at this and when they looked at the federal law they said that would be roughly the same amount, 1 percent. For the other 99 percent, what it means is security that they and their family get coverage.

It means that the benefits that they get will offer better coverage and it means they don't have to worry that, if somebody gets sick, they are going to lose their health insurance. But we should get on with implementation.

WALLACE: But, if I may, Mr. Lew, during the 2008 campaign, the president made some promises. The Republican National Committee since the ruling by the chief justice that the mandate is a tax, they have put out a video, noting what the president said to voters, when was campaigning in 2008. Let's watch. (BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If you are a family making less than $250,000 a year, you will not see your taxes go up.

You will not see one dime's worth of tax increase, any form of tax increase.

(END VIDEO CLIP)

WALLACE: Question -- didn't the president break that promise?

LEW: Well, Chris, you know, if you go back and you look at the laws that have been enacted since the president has taken office, we have cut taxes for those families. We have reduced their taxes.

(CROSSTALK)

WALLACE: But according to the (inaudible) this is going raise taxes for the families.

LEW: No, that is not what the Supreme Court said. What the Supreme Court said was this was constitutional. They said it didn't matter what Congress called it. It was a penalty for 1 percent.

WALLACE: Wait a minute, sir.

(CROSSTALK)

LEW: -- choose not to buy insurance.

WALLACE: Mr. Lew, they called it a tax.

LEW: No, actually, technically what they said is the Congress has many powers. There is the commerce clause, there's taxing powers and it was constitutional. That's what they said. It doesn't matter what they call it.

WALLACE: I can't let you go there. It specifically said that it is not constitutional under the commerce clause; they said it is constitutional under the tax. And as to the question about raising taxes for the middle class, if I may, sir, let's just look at the record.

The nonpartisan Congressional Budget Office estimates that in 2016, 4 million Americans will pay the mandate penalty or tax; 75 percent of those people will make less than $120,000 a year. And the CBO says between 2012 and 2021, those folks will pay $27 billion in additional taxes.

So --

LEW: Chris --

(CROSSTALK) WALLACE: -- finish my question and then I promise I will let you talk. The middle class is taking quite a hit by what the Supreme Court said is a tax.

LEW: I think if you look at all of the laws enacted in the last three and a half years you would see that those families have a tax cut. That say -- all of the independent analysts, whether it is the Congressional Budget Office or others, would validate that there has been a tax cut for middle class --

WALLACE: I'm not arguing that. All I'm saying is that this is a tax increase on the middle class of $27 billion over the next 10 years.

LEW: No, what this is, this is a law that says if you can afford insurance and you choose not to buy it and you choose to have your health costs be a burden to others, you will pay a penalty so that you will pay your fair share. That is what this law says.

For the 99 percent of the people who buy insurance or get it through the tax cuts that are in this act, they are not going to be affected. You keep your insurance, you don't pay any kind of penalty. For the very few people who decide to be free riders and not have insurance, but still have their costs go into the system so the rest of us pay it, there is a penalty. It is not a burden on the middle class.

WALLACE: Well, again, the nonpartisan CBO says 4 million Americans will be paying that tax by 2016. And let's look at why Chief Justice Roberts called it a tax. It will be collected and enforced by the Internal Revenue Service. What you pay is calculated as a percentage of your income, and here is what the president's lawyer, the solicitor general, Donald Verrilli, told the court in defending the mandate.

(BEGIN VIDEO CLIP)

DONALD VERRILLI, SOLICITOR GENERAL: Not only is it fair to read this as an exercise of the tax power but this court has an obligation to construe it as an exercise of the tax power if it can be upheld on that (inaudible).

(END VIDEO CLIP)

WALLACE: Mr. Lew, if it walks, looks and quacks like a duck, it's a duck.

LEW: Well, you know, Chris, it's been a long time since I've practiced laws. But one of the things about our judicial system is that you can make arguments to the court on multiple grounds. That is what Don was doing. He was saying there were a lot of ways to look at this. It was set up and it was not called a tax.

But there are powers that Congress has and you can justify a law under multiple ways. The court took that route. It is a penalty. It was defined as a penalty in the law. And it is something people choose, whether or not, to be subject to.

Most Americans want health insurance. Ninety-nine percent of people will take advantage of the fact that they have affordable coverage that can protect their families.

For the 1 percent that choose not to have insurance, they don't control whether they are going to be in an accident or be struck by illness. If they end up in a hospital and they have to have expensive treatment, those costs will be borne by other people who pay for insurance.

This penalty says that you cannot be a free rider. You cannot go without any payment. And the penalty is that payment. Very few people will choose it. In Massachusetts, 1 percent of people chose to pay the penalty instead of have insurance. People want health insurance.

WALLACE: I want to move on to something else, but I just have to ask one last time, I mean, there are lots of taxes, sir, that people either choose to pay or not, depending on their actions. The cigarette tax, I don't pay, because I don't smoke. Maybe somebody else pays because they do smoke. So there are plenty of taxes that are discretionary in terms of what your behavior is.

WALLACE: Would you agree that in Chief Justice Roberts' ruling, he said that this is constitutional only as a tax?

LEW: I would say that the opinion said is that there are multiple powers that Congress has to make law and this law is constitutional.

WALLACE: That is not what he said, sir. But, well, I'm going to move ahead.

The court also said that states don't have to expand Medicaid as ObamaCare requires. A number of Republican governors -- Medicaid rather.

A number of Republican governors say they may opt out. If they do, what happens to those millions of folks who are going to fall under the mandatory expansion of Medicaid up to 133 percent of the poverty level? And doesn't that, in fact, prevent, if some of those governors opt out, doesn't that prevent universal coverage?

LEW: You know, Chris, I, for the life of me, don't understand why a governor would refuse to let the people in their state take advantage of Medicaid coverage that is 100 percent paid for out of the federal budget.

WALLACE: But only for the first two years.

LEW: And then it is close to 100 percent. It is like in the 90 percent range. I think if you look at the history of Medicaid in the 1960s, when it was created, in the 1990s when the Child Health Program, was put into place, over time states all choose to come in.

Now, it doesn't all happen at once. I think the vast majority of states will come in right away. That is the right thing to do; that is what I think most states will do. Governors will have to make their decisions.

This whole law is built around states having a lot of flexibility to implement the whole health law in different ways that are -- work in their own state. We have actually proposed legislation to give more flexibility to the states.

This is a law that will cover millions and millions of people who don't now have health insurance, and I hope that the states come around, those few states that are slow to accept this coverage, and add it. WALLACE: And what would you say to a governor who's considering now that they have the option, decides I'm not going to get involved with that because I think it is going to cost me down the line?

LEW: I think those governors have to answer to the people in their state. You know, if you look at the people who are going be eligible, these are working people who earn low wages, who don't have health care. They are exactly the kind of people most governors should want to help.

WALLACE: Let's start -- some would say we have already been talking about it. Let's turn to the politics of this.

Governor Romney says that he will end ObamaCare on day one of his presidency. He says it raises taxes by $500 billion. He says it cuts Medicare by $500 billion and that it adds trillions of dollars to the deficit.

Are you happy to see ObamaCare be a referendum in this election?

LEW: You know, I think the facts are different than that. The Congressional Budget Office made clear that the health care law saves, not spends, money. It puts important mechanisms in place to help get control of health care spending more broadly.

When he was governor of Massachusetts, Governor Romney put a plan in place that has many of the features that the Affordable Care Act makes available on a national basis. Massachusetts is actually one of the states that will be eligible, almost immediately, because of that.

I don't think the American people want to have this debate again. I don't think they want to be pulled back to decades of debate to get to where we are. We now have are a law. The law is constitutional. We should implement it.

The president has said on many occasions that he wants to work across party lines if there are things that can be done to improve the law. That is the conversation we should be having, and we need to move on and deal with the economy and jobs. We need to put our efforts on creating opportunity for Americans to be employed.

WALLACE: All right. I want to -- we are running out of time. I have a couple of quick questions on other issues.

The Justice Department told the House on Friday that it will not prosecute Attorney General Holder on the House's citation of Holder for criminal contempt. Did the president approve that decision?

LEW: Well, executive privilege has to be invoked by the president, and then the Justice Department relied on opinion from the Reagan administration, which is that you don't prosecution once executive privilege is invoked. So the Justice Department made that decision, as has every administration relying on the Reagan opinion.

WALLACE: Does the president think that is right for the Justice Department to ignore the House's citing of Holder for contempt? LEW: I think that we have made clear that we think that the actions of the House were political, that they were not based in fact. You go back to what is at issue here, the facts of Fast and Furious. It was a bad procedure to run guns to Mexico. It started in the Bush administration in the regional office. The attorney general didn't know about it.

When he learned about it, he stopped it, because it is wrong. He has given all the information to Congress to understand what has happened up until that point. There is now a fishing expedition for documents that get well beyond finding those facts. Every administration --

WALLACE: I'm going to move on, but we do have to point out, the fact is that in February of 2011, two months after the border patrol agent, Brian Terry, died, it was the Justice Department that sent a letter to Congress denying that this operation existed. That did create some of the confusion.

LEW: Yes, and Chris, just to finish that story, the attorney general made clear he did not know about it before that. That letter would not have gone if the attorney general in Washington knew about it.

Something bad was going on. The Justice Department recognized it; the attorney general stopped it. So the policy here is --

WALLACE: It did take 11 months for the Justice Department to retract the letter. If I may just ask you one last question, sir. In the investigation of national security leaks that the Pentagon has ordered all of the top relevant officials to preserve all of their documents, the Director of National Intelligence says relevant agents must take lie detector tests.

As chief of staff have you ordered either of those steps with your staff?

LEW: Well, Chris, I can't speak to the details of how investigations are being responded to because, as you know, those details themselves are classified. But I can tell you that there is --

(CROSSTALK)

WALLACE: No, no, no, wait a minute. It is out there that the Justice -- that the Pentagon is ordering documents be preserved and the DNI is having polygraph tests. That is not classified.

LEW: I can tell you, there will be full cooperation, and the fact of the matter is that the president feels very strongly that we need to find out where these leaks happened. He relies on classified information every day to make life-and-death decisions. There is nobody who is more concerned about where this goes on than the president.

WALLACE: Does he feel so strongly that he will agree to questioning himself?

LEW: Chris, I'm not going speak to the details of how the investigation will be handled.

WALLACE: All right. We're going to have to leave it there. Mr. Lew, I want to thank you so much for joining us, as always. It's good to talk with you, sir.

LEW: Pleasure to be with you, Chris.

WALLACE: Up next, the GOP response: how Republicans will try to repeal ObamaCare and what they would put in its place. Senate Republican leader Mitch McConnell, after a quick break.

WALLACE: We want to get the GOP view of this week's big decision on "Obama-care." Joining us now from his home state of Kentucky is Senate Republican leader Mitch McConnell.

And, Senator, welcome back.

MCCONNELL: Good morning.

WALLACE: You just heard White House Chief of Staff Jack Lew say the court has spoken, it is time to move on. Are you persuaded?

MCCONNELL: He is doing the best he can with a really tough situation. The president said it was not a tax. The Supreme Court, which has the final say, says it is a tax. The tax is going be levied, 77 percent of it, on Americans making less than $120,000 a year. So it is a middle class tax cut -- tax increase.

Beyond that, Chris, the core of the bill, it is worth reminding people, is half a trillion dollars in cuts to Medicare. That is hospitals, nursing homes, home health care, and the like, $500 billion tax increase.

The Congressional Budget Office says it is also a job-killer. That it will cost the economy between 800,000 and a million jobs. This is the single worst piece of legislation that has been passed certainly in modern times. And it will be an issue, a big issue in the fall election.

I think the chief justice basically said, this is up to the American people to decide. We have one last chance here to defeat "Obama-care." We can do that in the November election.

WALLACE: Now, since the Supreme Court justice -- Chief Justice Roberts came out with his ruling declaring that the mandate is actually a tax, you have been hammering the president for imposing a new tax on the middle class.

But Mitt Romney has a mandate in his Massachusetts health care reform plan and the people in Massachusetts paid more than $20 million last year in that mandate penalty, tax, whatever you want to call it, so isn't that a Romney tax on the middle class?

MCCONNELL: Well, I have two thoughts there. Number one, that was a Massachusetts decision, not a national decision. And number two, every single Senate Democratic -- every Democratic senator voted for "Obama- care." It passed with not a vote to spare. Every single Democratic incumbent on the ballot this November was the deciding vote to pass this bill. This law is deeply unpopular with the American people. These Senate races across America will, indeed, be a referendum on this job-killing, health care, tax-increasing measure.

WALLACE: But if I may, sir, I mean, you didn't answer my direct question. If the Obama mandate is a tax on the middle class, isn't the Romney mandate a tax on the middle class?

MCCONNELL: Well, I think Governor Romney will have to speak for himself about what was done in Massachusetts. I can tell you that every single Democratic senator voted for this tax increase and these $500 billion cuts in Medicare. And it will be a huge issue in 2012.

The chief justice has in effect said this will be decided by the American people. That is why we have elections. And we will have one the first Tuesday in November.

WALLACE: All right, let's move on. If voters elect a Republican president and a Republican Senate, your top priority will be, you say, to repeal and replace "Obama-care." And I want to drill down into that with you.

One of the keys to "Obama-care" is that it will extend insurance access to 30 million people who are now uninsured. In your replacement, how would you provide universal coverage?

MCCONNELL: Well, first, let me say the single the best thing we could do for the American health care system is to get rid of "Obama- care," get rid of that half a trillion dollars in Medicare cuts, get rid of the half a trillion dollars in taxes.

In other words, the single biggest step we could take in the direction of improving American health care is to get rid of this monstrosity.

WALLACE: But if I may, sir, you've talked about repeal and replace. How would you provide universal coverage?

MCCONNELL: I will get to it in a minute. The first step we need to take is to get rid of what is there, this job-killing proposal that has all of these cuts to existing health care providers.

Secondly, we need to go step by step to replace it with more modest reforms. There will not be a 2,700-page Republican alternative. We will not take a meat axe to the American health care system. We will pull out a scalpel and go step by step and make the kinds of more modest changes that would deal with the principal issue which is cost.

Things like interstate sales of health insurance. Right now you don't have competition around the country in the selling of health insurance. That is a mistake. Things like lawsuit reform. Billions and billions of dollars are lost every year by hospitals and doctors in defensive medicine. Those kinds of steps... WALLACE: But respectfully sir, because we are going to run out of time and I just want to ask, what specifically are you going to do to provide universal coverage to the 30 million people who are uninsured?

MCCONNELL: That is not the issue. The question is, how can you go step by step to improve the American health care system? It is already the finest health care system in the world.

(CROSSTALK)

WALLACE: But you don't think the 30 million...

MCCONNELL: What our friends on the other...

(CROSSTALK)

WALLACE: You don't think the 30 million people that were uninsured is an issue?

MCCONNELL: Let me tell you what we are not going to do. We are not going to turn the American health care system into a Western European system. That is exactly what is at the heart of "Obama- care." They want to have the federal government take over all of American health care.

Look, the federal government can't handle the health care it has already got. Medicare is in trouble already. Medicaid is in trouble already. We need to clean up the health care the federal government is already responsible for before we start immodestly trying to take over all of American health care. That is a big step in the wrong direction.

WALLACE: Let me ask you another question. "Obama-care" guarantees that people who have preexisting conditions and who don't currently have health insurance cannot be denied coverage because of that preexisting condition.

If you repeal "Obama-care," how will you protect those people with preexisting conditions?

MCCONNELL: There are over half of the states that already have these high risk pools that deal with that issue. That kind of state innovation ought to be encouraged by the federal government.

I don't think anybody thinks that the federal government can take over this whole area, all of health care for 300 million Americans, and make it better. We can't even handle the health care we have already got. That is the kind of thing that ought to be dealt with at the state level. We he ought to be encouraging that.

WALLACE: But insurance companies say that they can't afford to make this deal, that they are going to take anybody, even if they have a preexisting condition, unless they get all of those customers, the millions of customers from the mandate.

MCCONNELL: That is what the state-based high risk pools are for, Chris. That is exactly what I'm saying.

WALLACE: And you are saying that that would take care of people who don't have insurance, who want to get insurance, but are being denied it because of a preexisting condition?

MCCONNELL: I'm saying that this ought to be dealt with at the state level by these state-based high risk pools that over half the states I believe have already developed.

WALLACE: Even if you win a majority in the Senate chances are that Democrats are still going to have enough votes to be able to conduct a filibuster. And some of your Republican colleagues are suggesting that the way, even with the Republican majority but not a filibuster-proof majority, that you can undo "Obama-care" is through a budget process called reconciliation where you only need 51 votes.

MCCONNELL: Right.

WALLACE: Now that is what the democrats used, the 51-vote reconciliation, to pass "Obama-care." Would you consider using reconciliation to undo it?

MCCONNELL: Yes, the chief justice said it is a tax, and taxes are clearly what we call reconcilable. That's the kind of measure that can be pursued with 51 votes in the Senate. And if I'm the leader of the majority next year, I commit to the American people that the repeal of "Obama-care" will be job one.

By the way, I think we will also be insisting that we have a vote on "Obama-care" again before the election. But in terms of achieving it, it would take a different Senate with a different majority leader and a different president. But, yes, that could be done with a simple 51 votes.

WALLACE: The reason I ask is because when they were passing "Obama-care" through reconciliation you were very upset with it, you called it secretive, anti-democratic, hyper-partisan. Why the difference?

MCCONNELL: Well, the first time it passed the Senate it didn't pass through reconciliation. It got 60 votes. There were 60 Democrats and 40 Republicans, they were able to pass permanent law.

Look, reconciliation is available because the Supreme Court has now declared it a tax. They have unearthed the massive deception that was practiced by the president and the Democrats constantly denying it was a tax.

You heard the president's chief of staff continue to try to deny it was a tax just this morning, and the Supreme Court -- the chief justice has made it clear it is a tax. And as a tax, it is eligible for reconciliation.

I want to ask you, finally, about Chief Justice Roberts's ruling. Some conservatives are calling him a traitor for saving "Obama-care." But some other conservatives are noting that he sharply curtails Congress's ability to use the commerce clause to regulate everything.

He sharply curtails the federal government's ability to tell states what they have to do or punish them if they don't. How do you read the Roberts ruling?

MCCONNELL: Well, it was deeply disappointing. I think Justice Kennedy got it right. He found both the individual mandate and the Medicaid mandate unconstitutional, and said clearly Congress would not have passed the rest of it without those two pillars, which he found unconstitutional. He and three others, four of them, justices agreed that the whole thing should be replaced.

I'm sorry that didn't happen. This was a huge mistake for the country and the chief justices declared it a tax and therefore he has upheld it. Now the American people will have the final decision and I'm confident they are going to give us the votes to repeal it.

WALLACE: And do you not see anything for conservatives in what Justice Roberts said about the commerce clause and about the federal ability to dictate to states what they must and must not do?

MCCONNELL: Well, I agree with that and, of course, the other four justices felt that way as well.

WALLACE: We're going to have to leave it there. Senator McConnell thank you so much for coming in. Always a pleasure to talk with you, sir, and we will stay on top of this debate straight through to November.

MCCONNELL: OK. Thank you.

WALLACE: Coming up, our Sunday panel tackles the future of ObamaCare. Chief Justice Roberts' controversial ruling and later what it means for the 2012 presidential race.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It should be pretty clear by now that I didn't do this because it was good politics. I did it because I believed it was good for the country.

WALLACE: President Obama taking advantage of a second chance to try to persuade voters they will like ObamaCare, while Republican Senator John Barrasso is having none of it.

And it's time now for our Sunday group: Brit Hume, FOX News senior political analyst; Liz Marlantes of "The Christian Science Monitor"; FOX News correspondent Shannon Bream, who covers the Supreme Court for us; and Charles Lane from "The Washington Post."

Well, Chief Justice Roberts' ruling clearly closes off the legal avenue as a way to overturn ObamaCare. But it clearly, as we could hear today, doesn't end the political debate.

Brit, where is ObamaCare now? How secure is it as a big government program that is going go forward?

BRIT HUME, FOX NEWS POLITICAL ANALYST: Well, as a political/legislative matter, it is more vulnerable now to repeal than it was before, for the reasons that you just discussed with Senator McConnell, this being a tax opens the possibility that it can be dealt with, acted on, potentially repealed using a process called budget reconciliation, which means no filibuster allowed.

A simple majority of 51 is enough to undo the law. So and furthermore, in terms of the popularity of the law -- in Jack Lew's interview with you was a classic illustration of this -- this is going to do nothing for the law's popularity. Already unpopular, now it turns out that it's going to involve a sizable tax increase.

And the administration is terribly eager not have that get around, as you can see. So as a political/legislative matter, the law is on shakier ground than it might have been. If they'd upheld it under the commerce clause, that would have been a different proposition?

WALLACE: Liz, how secure is ObamaCare?

LIZ MARLANTES, "THE CHRISTIAN SCIENCE MONITOR": Well, I'm not totally sure that I agree with that. It is unclear exactly how easy it is going to be for Republicans to repeal the whole thing using reconciliation. I mean, perhaps now because the mandate has been labeled a tax, if that portion can be repealed, but there is other parts of the law, you know, the sort of directives to insurance companies you can't deny coverage to people with preexisting conditions, those sorts of things.

They would also have to be dealt with. And if they can't get that through reconciliation, that might be hanging out there (inaudible) a bigger mess to just defund the parts. You know, Republicans talk about defunding it. It could create a bigger mess which then a President Romney and Republican Senate would be responsible for having created. So I'm not sure that the legislative package --

(CROSSTALK)

HUME: Remember, this was the way -- this penalty slash which we now know is a tax -- was the way to fund that whole provision that says you can't deny coverage based on preexisting conditions. I don't think there is any reason why that couldn't be undone as well under reconciliation. They are intertwined.

MARLANTES: There are Democrats who think that you take the budget issues out but they are actually separate from other parts of the law. And if Democrats can block those other parts, then it just creates a bigger mess. So, anyway, I'm not sure that it's going to be necessarily so easy, even with 50 Republican votes in the Senate.

WALLACE: I want to dig down into the chief justice's ruling, and I want to ask you, Shannon, basically the same question I asked Mitch McConnell, because the legal world is still debating the long-term effects of the Roberts ruling.

On the one hand, he saved ObamaCare -- that is a big deal and that is the bottom line. On the other hand, he appeared to set new limits on what Congress can regulate or not under the guise of the commerce clause. He also set new limits on what the federal government can mandate that states have to do.

In terms of its long-term constitutional implications, how do you read the Roberts ruling?

SHANNON BREAM, FOX CORRESPONDENT: I think it will be so tough for any one who wants to pass a similar program under the similar argument is going to have a tough time -- this is not going be an easy opinion for anybody to cite to. A lot of people see it as a 1-4-4 decision. If anything, there was very strong language, as you mentioned --

(CROSSTALK)

WALLACE: 1-4-4, meaning the chief justice was here, then you had the four liberals and the four conservatives?

BREAM Right. And so it's going to be tough to look to it as a top precedent for making any similar arguments. He has very tough language saying the commerce clause, not a general license to regulate an individual from cradle to grave.

I mean, he really reeled that in and he talked about the fact that this was a tax and constantly turned it back, it sounds like, to the legislative process, because he said the court doesn't express any opinion on the wisdom of the Affordable Care Act.

Under the Constitution, that judgment is reserved to the people. And there are several references that make it sound like this goes back to your legislators. If you don't like them, address it with them.

WALLACE: Let me ask you a question about that, because you know the court far better than I do. Is that unusual for a justice to say, hey, you know, we may not like this, but it is up to the voters? I mean, it almost seemed like an invitation to say overturn ObamaCare, but you have got to do it at the polls.

BREAM: And some people say that this is a mine field that Roberts tucked in to folks who have supported this law all along, who say, listen, they didn't like it. He did uphold it, but he provided a lot of tools, a lot of potential outs for those that don't like this, ways to go after it. So it does sound a bit unusual, but he essentially was saying I don't get to the merits of whether or not this is a good law. I tell you to take it up elsewhere.

WALLACE: Charles, you are a long-time court watcher. How significant is this ruling?

LANE: Well, you know, I have been watching John Roberts ever since he was arguing cases as a lawyer and I've always had the impression that while everyone else is playing checkers, John Roberts is playing chess.

And what he has done in this brilliant opinion is to sacrifice a pawn, called the individual mandate, to put the entire Great Society in check, and he has done that by getting two liberal justices to agree with him in a 7-2 ruling, that there are serious limitations on the federal government's ability to use its spending power to get the states to cooperate in welfare and education programs, which is really how everything works, or a lot of things work, including education and Medicaid, et cetera.

And he has done that and gotten liberals to applaud him for it, so that now, next term when Voting Rights Act Section 5, an affirmative action in colleges come up before the court, as they are going to, and he votes with the other four conservatives to strike them down, all those liberals who might otherwise complain will now have to acknowledge that this fair-minded statesman, John Roberts, was involved in that decision.

This is a man of great brilliance and all those conservatives who are griping about this ruling need to give it a second thought.

WALLACE: Shannon, as our court watcher, there is a lot of chatter in Washington right now that perhaps Roberts switched his vote, that he was on, at first on the side of the conservatives. Then he switched to the side of the so-called liberals on the court and that he may have been cowed by outside liberals, who were saying if he went with the conservatives that this would show how partisan the court was, the five conservatives voting down a Democratic president's big plan.

Do you buy any of that? Do you see -- do you believe that he switched his vote?

BREAM: I think it is a very legitimate theory to be considered. If you think about the fact that the president, from the Rose Garden in April, actually publicly called out the court and said he was confident they wouldn't do something so unprecedented as this, although we know it is not completely unprecedented, Senator Patrick Leahy, who heads up the Senate Judiciary Committee, went to the floor about a month ago and railed on Roberts and talked about Citizens United and the fact that this court was basically losing the confidence of the American people. I think it's possible because if you read the dissent, it sounds in many places as if, at one point, it was written as a majority opinion. Did they have his vote and lose it at some point? I think there are clues to suggest that's highly possible.

WALLACE: You know, Brit, I was interested today to get my advance copy of "Time" magazine, "Roberts Rules," and there's a lot of coverage today of the chief justice.

Do you expect to see the mainstream media revise its opinion of John Roberts from a right-wing zealot to a statesman?

BRIT HUME, FOX NEWS POLITICAL ANALYST: For a while. I mean, I do think that it is reasonable to say, whether he switched his vote or not, that this decision that he reached was more institutional than constitutional.

The matter of it being a tax, I think, required some really strained reasoning. And I read the portion of the opinion in which he makes the case that this really has the earmarks of a tax -- and it does have some. And then read the dissent on that. Hoo, boy.

And the dissent is much more compelling on that. I mean, I think this was a strained piece of legal reasoning and I think it was a kind of a technical and strategic piece of jurisprudence that, I agree, laid some mine fields and I think that I really like Chuck's suggestion that Roberts is playing chess here and everybody else is playing checkers.

WALLACE: I just wanted to give you -- you wanted to get in; you have a final comment?

UNIDENTIFIED MALE: Well, I think I would say that, again, those who might suggest that there is something sort of pettifoggish about this opinion, it's all a bunch of legal legerdemain, they're right.

But I think Roberts, in his view, sees it as more important to secure long- term objectives and, very importantly, to get liberals to buy into them so that they can't complain when he unfolds his larger plan later on -- very, very smart man.

WALLACE: All right. We have to take a break here. But when we come back, we'll continue our discussion of the historic ObamaCare ruling and we'll dig into what it means for the presidential race.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This idea has enjoyed support from members of both parties, including the current Republican nominee for president.

FORMER GOV. MITT ROMNEY, R-MASS., PRESIDENTIAL CANDIDATE: If we want to get rid of ObamaCare, we are going to have to replace President Obama. My mission is to make sure we do exactly that.

(END VIDEO CLIP)

WALLACE: President Obama and Governor Romney, wasting no time in turning the Supreme Court ruling into a political weapon. And we're back now with the panel.

So Congressional Republicans, as we saw with Mitch McConnell today, have picked up on Chief Justice Roberts' ruling that the mandate is actually a tax and say that President Obama broke his pledge during the campaign not to raise any taxes on the middle class.

Liz, how effective is that argument, especially given the fact that Romney then has his own tax problem because he has his own mandate in Massachusetts?

LIZ MARLANTES, "THE CHRISTIAN SCIENCE MONITOR": I think there is going to be challenges on both sides. I mean, this has been a tricky issue for the Obama White House. Any time you have the White House coming out and saying, look, we really want to get back to talking about the economy, you know that this is not a good issue for them.

And I think there is something to be said for the fact that Obama, during his own campaign, did not campaign for an individual mandate; in fact, campaigned against it. And I really think in a way that this is coming back to hurt him in part because of that. He never campaigned on it. He campaigned against it and then he passes it and now has to defend it.

The irony, of course, is that now he is having to defend it against somebody who passed one himself, in fact, who, you know, arguably it was Romney's signature achievement as governor of Massachusetts and I still think that that is incredibly awkward for Romney to have to go out there and be the one essentially running away from his own record and trying to attack Obama on this.

So it is tricky for both sides. I think to some extent we are going to have new job numbers come out next Friday, and that will probably shift the conversation again. The one thing I will say is I do think this will give a new dynamic to the Senate races. I think that Senate candidates, Republican Senate candidates will really try to use the momentum from this to try to push for a return to majority.

WALLACE: Well, you certainly could see Mitch McConnell doing that, saying every single senator who voted in that 60 votes was voting for a tax increase. So they're going to try and wrap that around them.

How do you think, particularly in the presidential race, Brit, that the mandate as a tax plays out?

HUME: Well, I think it burdens it. That is why Jack Lew acted the way he acted. They won't call it a tax. They are desperate not to call it a tax. They know how politically toxic being a tax is. And just to respond to what Liz was just saying, if you talk about -- there is a subset of voters who are going to -- who are going to be enormously influenced by their desire to get rid of ObamaCare. Now, how many of them are going to vote for Obama, because Mitt Romney has an individual mandate back in his record as governor? My answer to that is not many. He pledged to overturn it and he's never stopped talking about it ever since.

I don't think many people are going to be persuaded to go the other way because they think he once was guilty of this.

WALLACE: Charles, to the degree that the November election, and I think we all agree, it's not going to be the central issue, but to the degree that it becomes a referendum on "Obama-care," how do you see that playing out?

On the one hand the president can emphasize the parts of the plan that are popular, like, as we talked about, preexisting conditions, or kids can stay on their parents' insurance until they are 26.

On the other hand, Romney can say feeds in to the whole idea that Obama is a big government president?

LANE: I've always felt that politically the best result for the Republican Party of this Supreme Court case would be some ruling upholding the mandate. And the reason for that is that this election both sides are pursuing as a base-mobilizing election. Get your loyalists motivated to go to the polls.

And nothing motivates the Republican base like the boogieman of "Obama- care." That is one thing they all agree on. And now, you've just heard Mitt Romney or maybe it was Mitch McConnell, I think, say, this is our last chance, right?

The Supreme Court option is exhausted. For those in the Republican base who are really dedicated to getting rid of "Obama- care," they've got one more way to do it, and that's to go to the polls in mass numbers in November and vote out all of the Democrats. And so in that regard I think this is advantage Republicans politically.

WALLACE: You know, I can see that both ways, Shannon. Because if the court had thrown out "Obama-care" and said the whole thing is unconstitutional, then you have got the constitutional law lecturer who spent a year of the country's time on something that didn't even turn out to not be legal.

On the other hand though, does this mobilize, exactly as Charles is suggesting, the conservative, the tea party activists who have never been keen on Mitt Romney?

BREAM: I've got to tell you, there were thousands of them outside the court. And if they are any indication, on Thursday, when we got the opinion, many of them, they continued to rally all throughout the day, clanging their bells and waving their "Don't Tread on Me" flags, and saying, this is it, we are awake, you have awakened a sleeping giant once again. The tea party didn't go away, but we are coming back even stronger than ever.

It's interesting though to try step away from the very tight inside-the- beltway politics of it. I went to the dentist on Friday after we got the opinion and he said, wow, a huge win for the president yesterday, this is great for his campaign.

So we have to remember, as much as those who quote-unquote "lost" in this opinion on Thursday want to have political spin with it to those who aren't as wonky maybe as those of us sitting here, they think the president won big on Thursday.

LANE: Her dentist does a great job. Beautiful teeth.

(LAUGHTER)

BREAM: Thank you.

WALLACE: I'm not sure about the political acumen, but he certainly does a good job on teeth.

I mean, how do you weigh that? On the one hand, I think we all agree it would have been a disaster for the president if it had been overturned. On the other hand, does the fact that, you know, somebody said the winners celebrate, the losers mobilize.

MARLANTES: I think it would have been worse if it had been overturned, actually. I really think it would have been embarrassing and would have allowed Romney to make the argument that essentially Obama's whole first term had been wasted.

That he, you know, could have spent that time fixing the economy. And instead he tried to pass this huge thing that then, you know, ended up nowhere. So I think that would have been certainly the worse outcome.

The question will be whether the White House really tries to make a concerted effort for the first time ever to sell this bill. And...

HUME: What?

MARLANTES: ... so far you don't...

(CROSSTALK)

WALLACE: I was waiting for that reaction.

MARLANTES: Well, that's what I'm saying. I'm saying, you know, they still are gun-shy about it.

HUME: How much speeches did Barack Obama make in support of this proposition before the bill passed? He made dozens of speeches. Listen, this is a problem that the dogs don't like the dog food. It is not because the ad campaign hasn't worked very well. This bill has been consistently unpopular by similar margins since before it was passed. It remains so today. And the idea that because it is constitutional and legitimate -- the mandate is constitutional and legitimate as a tax, is not going to help it.

MARLANTES: I agree with you and I think there is something problematic when you essentially have people from the White House saying, look, the American people will like the bill once it actually is fully implemented, then they will realize how great it really is, but we can't totally sell it until then, which is what you sort of hear from the White House. And that's a problem for them.

HUME: And you cannot underestimate the extent to which businesses all over the country feel that this is a drag on their planning. It is a deterrent to hiring and so forth. And it feeds then into the other big issue -- the bigger issue, which is the economy.

And I think these two things go together and I think they are unmistakably burdensome to the president and his reelection chances.

LANE: I sort of agree with Liz in the sense that this is a tricky one from Romney too. I suppose if these two campaigns could reach some sort of deal where neither has to talk about health care reform for the rest of the term, they would both be happy.

But I must say, looking back on this when this is all over, it will be interesting to reflect on the Obama administration's decision to take this to the Supreme Court during the election year, because they had the option of pursuing it in lower courts a little bit further.

And I repeat, I think it was a lose-lose proposition for them. I really do. They would have lost if they actually lost the ruling, and then there would have been the embarrassment you talk about. But I think they still lose because by having the individual mandate upheld and labeled as a tax by none other than the chief justice of the United States, it mobilizes the Republican base like nothing else would have.

WALLACE: Shannon, I want to pick up on what Brit said, because I agree with it, I don't think that this -- "Obama-care" is unpopular because the president hasn't tried to sell it, he has tried to sell it again and again and again. Dozens of speeches and hasn't been able to.

But, you know, you have heard him in that a statement that he made after the ruling talk about, you know, I did this because it is good for the country, and talk about some of the specific parts.

The plurality of Americans are against the overall plan but they support some of the individual things like the 26-year-olds on their parents or the preexisting condition, things like that. Do you see the White House making another effort, you know, a second effort to make a first impression or are they better off just staying away from "Obama-care"? BREAM: I think they do continue to try to make the first impression a second time. There were Democrats on Thursday who said openly, this is a gift to us, this is a chance to sell this again in a better way than we did the first time, their language. Brit didn't like it. But that is true.

But I also think that there is going to be a lot of pressure on the GOP who -- you know, the House has already scheduled a full repeal vote for July 11th, was the last I heard. There is going to be a lot of pressure on them to say what they would replace it with because people do like those individual tenets of this bill.

And I think the GOP has to weigh very carefully in proving that they would offer something better than they repealed.

WALLACE: Real quick, Liz.

MARLANTES: I just was going to say and I think now Democrats do have an opportunity to say, if they want to, we are the party that believes in universal coverage and the Republican Party does not. I mean, look at your interview with McConnell. It is pretty clear they could make that argument.

WALLACE: All right. We're going to have to leave it there. Thank you, panel. See you next week. And don't forget to check out "Panel Plus" where our group picks right up with the discussion on our Web site, foxnewssunday.com. We will post the video before noon Eastern time. And make sure to follow us on Twitter, @FOXNewsSunday.

Up next, we hear from you.

(COMMERCIAL BREAK)

WALLACE: Time now for some comments you posted to our blog Wallace Watch, and many of you responded to our interview last week with the legendary energy executive.

Nicholas Watson writes -- "I always enjoy T. Boone Pickens. I like his ability to give a straight answer and we need to think of energy as more than just a pocketbook issue."

But that wasn't thinking big enough for Amanda from Waco, Texas -- "I would happily vote for Mr. Pickens as the next president of the United States, because energy is the single most important issue right now."

Please keep your comments coming. You can find us at foxnewssunday.com. That's it for today, have a great week, and we'll see you next "FOX News Sunday."

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FNS Guests

Sunday December 11, 2016

Coming up this week: President-elect Donald Trump sits down exclusively with Fox News Sunday in his first Sunday show interview since winning the election. Chris will travel to New York City to speak with Mr. Trump about the transition and then go on the road with the President-elect as the conversation continues on "Trump Force One." Fox News Sunday airs at 2P/10P/2A on Fox News Channel & check your local listings.